Economy of Papua New Guinea

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Economy of Papua New Guinea
POM Downtown.jpg
Currencykina (PGK)
calendar year
Trade organisations
Country group
PopulationIncrease 8,606,316 (2018)[3]
  • Increase $23.587 billion (nominal, 2019 est.)[4]
  • Increase $34.257 billion (PPP, 2019 est.)[4]
GDP rank
GDP growth
  • −0.8% (2018) 6.0% (2019e)
  • −1.3% (2020f) 3.4% (2021f)[5]
GDP per capita
  • Decrease $2,742 (nominal, 2019 est.)[4]
  • Increase $3,983 (PPP, 2019 est.)[4]
GDP per capita rank
GDP by sector
4.4% (2020 est.)[4]
Population below poverty line
  • 39.9% below poverty line (2009 est.)[7]
  • 65.6% on less than $3.20/day (2009)[8]
41.9 medium (2009, World Bank)[9]
Labour force
  • Increase 2,640,304 (2019)[12]
  • 47.4% employment rate (2010)[13]
Labour force by occupation
UnemploymentSteady 2.5% (2017 est.)[6]
Main industries
copra crushing, palm oil processing, plywood production, wood chip production; mining (gold, silver, copper); crude oil and petroleum products; construction, tourism, livestock (pork, poultry, cattle), dairy products, spice products (turmeric, vanilla, ginger, cardamom, chili, pepper, citronella, and nutmeg), fisheries products
Decrease 120th (medium, 2020)[14]
ExportsDecrease $8.522 billion (2017 est.)[6]
Export goods
liquefied natural gas, oil, gold, copper ore, nickel, cobalt logs, palm oil, coffee, cocoa, copra, spice (turmeric, vanilla, ginger, and cardamom), crayfish, prawns, tuna, sea cucumber
Main export partners
ImportsDecrease $1.876 billion (2017 est.)[6]
Import goods
machinery and transport equipment, manufactured goods, food, fuels, chemicals
Main import partners
FDI stock
  • Increase $4,194 Million (31 December 2017 est.)[15]
  • Increase Abroad: $473 Million (31 December 2017 est.)[15]}}
Increase $4.859 billion (2017 est.)[6]
Positive decrease $17.94 billion (31 December 2017 est.)[6]
Public finances
Steady 36.9% of GDP (2017 est.)[6]
−4.8% (of GDP) (2017 est.)[6]
Revenues3.638 billion (2017 est.)[6]
Expenses4.591 billion (2017 est.)[6]
Economic aidno data
Standard & Poor's:[16]
BB- (Domestic)
B+ (Foreign)
BB (T&C Assessment)
Outlook: Stable[17]
Outlook: Stable
Foreign reserves
Increase $1.735 billion (31 December 2017 est.)[6]
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars.

The economy of Papua New Guinea is largely underdeveloped. It is dominated by the agricultural, forestry, and fishing sector and the minerals and energy extraction sector. The agricultural, forestry, and fishing sector accounts for most of the labour force of Papua New Guinea, while the minerals and energy extraction sector is responsible for most of the export earnings.[18]

PNG's GDP growth has been driven by the extraction industries and real GDP growth per capita has averaged 4% since mid-2000.[19] The country has made significant progress investing proceeds from oil and gas in infrastructure building. As a result, its major cities like Port Moresby and Lae have received increased international investor attention, giving rise to an unprecedented building boom to exploit the opportunities presented by the country's rise as a regional economic leader in the South Pacific region. This is well supported by its strategic location as a Pacific's gateway to Asia as well as its comparatively huge landmass and demographic profile (almost 7 times that the rest of smaller Pacific Island nations)

The International Monetary Fund has reported[20] that despite PNG's poverty, it is richly endowed with natural resources, but exploitation has been hampered by the rugged terrain and the high cost of developing infrastructure.[21] Agriculture provides a subsistence livelihood for the bulk of the population. Mineral deposits, including oil, copper, and gold, account for 72% of export earnings.

Budgetary support from Australia and development aid under World Bank auspices have helped sustain the economy. Australia is PNG's largest aid donor, providing $A506 million ($US376 million) in aid in 2016.[22] In 1995, the PNG government reached an agreement with the International Monetary Fund (IMF) and World Bank on a structural adjustment program, of which the first phase was successfully completed in 1996. In 1997, droughts caused by the El Niño weather pattern wreaked havoc on PNG's coffee, cocoa, and coconut production, the mainstays of the agricultural-based economy and major sources of export earnings. The coffee crop was slashed by up to 50% in 1997. Despite problems with drought, there was a small recovery in GDP in 1998. Growth increased to 3.6% in 1999 and may be even higher in 2000, say 4.3%.


The economy generally can be separated into subsistence and market sectors, although the distinction is blurred by smallholder cash cropping of coffee, cocoa, and copra. About 75% of the country's population relies primarily on the subsistence economy. The minerals, timber, and fish sectors are dominated by foreign investors. Manufacturing is limited, and the formal labour sector consequently also is limited.

Mineral resources[edit]

In 1999, mineral production accounted for 26.3% of gross domestic product. Government revenues and foreign exchange earning minerals. Copper and gold mines are currently in production at Porgera, Ok Tedi, Misima, Lihir, Simberi[23] and Hidden Valley.[24] As of 2014, talks of resuming mining operations in the Panguna mine have also resurfaced, with the Autonomous Bougainville Government and National Government of Papua New Guinea expressing interest in restarting mining operations in the area.[25]

New nickel, copper and gold projects have been identified and are awaiting a rise in commodity prices to begin development. At early 2011, there are confirmation that Mount Suckling project has found at least two new large highly prospective porphyry bodies at Araboro Creek and Ioleu Creek.[26] A consortium led by Chevron is producing and exporting oil from the Southern Highlands Province of Papua New Guinea. In 2001, it expects to begin the commercialization of the country's estimated 640 km³ (23 trillion cubic feet) of natural gas reserves through the construction of a gas pipeline from Papua New Guinea to Queensland, Australia. The project was shelved.

Agriculture, timber, and fish[edit]

The agricultural, forestry, and fishing sector accounts for most of the labour force of PNG. Agriculture currently accounts for 25% of GDP and supports more than 80% of the population. Most agriculture is subsistence, while cash crops are exported. The main crops by value are coffee, oil, cocoa, copra, tea, rubber, and sugar. The timber industry was not active in 1998, due to low world prices, but rebounded in 1999. About 40% of the country is covered with timber rich trees, and a domestic woodworking industry has been slow to develop. Fish exports are confined primarily to shrimp, although fishing boats of other nations catch tuna in Papua New Guinea waters under license.

Papua New Guinea has the largest yam market in Asia.[27][28]


In general, the Papua New Guinea economy is highly dependent on imports for manufactured goods. Its industrial sector—exclusive of mining—accounts for only 9% of GDP and contributes little to exports. Small-scale industries produce beer, soap, concrete products, clothing, paper products, matches, ice cream, canned meat, fruit juices, furniture, plywood, and paint. The small domestic market, relatively high wages, and high transport costs are constraints to industrial development.


Until the second half of 2007, information and communication technology (ICT) services in Papua New Guinea (PNG) were limited to urban centres under the monopoly operator, Telikom PNG (Mitchel 2008). Thereafter, the Irish owned utility Digicel entered the mobile market and expanded mobile signal coverage across the country enabling connectivity to many people — the mobile phone penetration rate reached 41 per cent by 2014, marking a substantial change in the communications landscape.[29] PNG has 42.68 mobile phone users per 100 population, estimated in 2017.[30] PNG has a low level of broadband uptake, estimated in 2017 at 0.213 per 100 population. [31]


Particularly in rural areas there is reliance on traditional sources of biomass energy for cooking.


Access to electricity[edit]

By 2017, only 50.42 % of the rural population had access to electricity.[32] 80.23% of the urban population in 2017 had access to electricity.[33] Limitations in the transmission and distribution infrastructure lead to frequent outages in urban centers.[34]


Electricity - consumption: 3.116 billion kWh (2012 est.)[35]


Electricity - production: 3.35 billion kWh (2012 est.)[35]

Transmission and distribution[edit]

PNG Power Ltd (PPL) operates three separate grids. There are two main large grids, the Port Moresby system serving the National Capital District and the large Ramu grid that extends into the highlands. Also, PPL operates the small Gazelle Peninsula Grid powered mainly by a 10 MW run-of-river hydro plant.[36]

Entities and institutions[edit]

The Electricity Commission (ELCOM) was privatised with the passage of the Electricity Commission (Privatization) Act 2002. PNG Power Limited (PPL) is a vertically integrated utility responsible for generation, transmission, distribution and retailing of electricity throughout Papua New Guinea.

Electricity generation by source[edit]

Renewable energy[edit]

A study by Bloomberg New Energy Finance ranked PNG in the top 10 for potential renewable resources, with about 2.5 GW of these but only 2% of it exploited.[37]

Hydroelectric projects[edit]

The Yonki Dam project, which commenced operation in 1991, on the Ramu River has generation capacity of 77 MW (103,000 hp) (Ramu 1) plus proposed additional capacity of 18 MW.

Proposed projects[edit]

The list of intended projects include the US$2 billion Ramu 2 hydro project on the Ramu River to be built under a public-private partnership with Shenzen Energy Group.[38]

Edevu Dam is to be constructed by PNG Hydro Development Ltd (PNGHDL) to generate 50 Megawatts (MW).[39]

Consultants to PNG Power have conducted feasibility studies for the Naoro Brown hydroelectricity Project which would supply up to 80MW of electricity to the Port Moresby grid. [40]


The Bank of Papua New Guinea (BPNG) is the central bank of Papua New Guinea. Its main function is to issue currency and to act as the banker and financial agent to the Government. It is also in charge of regulating banking and other financial services and manages the gold, foreign exchange and any other international reserves of Papua New Guinea.

BPNG is engaged in developing policies to promote financial inclusion and is a member of the Alliance for Financial Inclusion, which had been formed in 2008. In 2013, BPNG made a Maya Declaration Commitment[41] to create an enabling environment for building an inclusive financial sector in Papua New Guinea.[42]

The currency of Papua New Guinean, issued by the BPNG, is the kina, which was introduced on 19 April 1975 to replace the Australian dollar.

Trade and investment[edit]

In 2014, Papua New Guinea's merchandise exports were:

  • 41% fuels and mining;
  • 23.8% agriculture;
  • 6.2% manufacturing; and
  • 29% other.[43]

Major destinations for merchandise exports include Australia (39.9%), the European Union (20.2%), Japan (11.7%), China (6.7%), and Singapore (5.6%).

In 2014, Papua New Guinea's merchandise imports were:

  • 17.8% fuels and mining;
  • 11.4% agriculture;
  • 69.4% manufacturing; and
  • 1.4% other.[43]

Major source countries for merchandise imports include Australia (34.4%), Singapore (14.3%), the European Union (8.3%), China (6.9%), and Japan (6.4%).

Petroleum, mining machinery and aircraft have been the primary U.S. exports to Papua New Guinea. In 1999, as mineral exploration and new minerals investments declined, as did United States exports. Crude oil is the largest U.S. import from Papua New Guinea, followed by gold, cocoa, coffee, and copper ore.

U.S. companies are active in developing Papua New Guinea's mining and petroleum sectors. Chevron operates the Kutubu and Gobe oil projects and is developing its natural gas reserves. A 5,000–6,000 m³ (30,000–40,000 barrel) per day oil refinery project in which there is an American interest also is under development in Port Moresby.

Papua New Guinea became a participating economy in the Asia-Pacific Economic Cooperation (APEC) Forum in 1993. It joined the World Trade Organization (WTO) in 1996.

Development programs and aid[edit]

Papua New Guinea is highly dependent on foreign aid. Australia has been the largest bilateral aid donor to PNG, providing $A506 million ($US376 million) in 2016.[22] Budgetary support, which has been provided in decreasing amounts since independence, was phased out in 2000, with aid concentrated on project development.

Other major aid sources to Papua New Guinea are Japan, the European Union, the People's Republic of China, the Republic of China, the United Nations, the Asian Development Bank, the International Monetary Fund, and the World Bank. Volunteers from a number of countries, including the United States, and mission church workers also provide education, health, and development assistance throughout the country.

Economic conditions[edit]

(as of 2003)

By mid-1999, Papua New Guinea's economy was in crisis. Although its agricultural sector had recovered from the 1997 drought and timber prices were rising as most Asian economies recovered from their 1998 slump, Papua New Guinea's foreign currency earnings suffered from low world mineral and petroleum prices. Estimates of minerals in exploration expenditure in 1999 were one-third of what was spent in 1997. The resulting lower foreign exchange earnings, capital flight, and general government mismanagement resulted in a precipitous drop in the value of Papua New Guinea's currency, the kina, leading to a dangerous decrease in foreign currency reserves. The kina has floated since 1994. Economic activity decreased in most sectors; imports of all kinds shrunk; and inflation, which had been over 21% in 1998, slowed to an estimated annual rate of 8% in 1999.

Citing the previous government's failure to successfully negotiate acceptable commercial loans or bond sales to cover its budget deficit, the government formed by Sir Mekere Morauta in July 1999 successfully requested emergency assistance from the International Monetary Fund and the World Bank. With assistance from the Fund and the Bank, the government has made considerable progress toward macroeconomic stabilization and economic reform.

Main indicators[edit]

The following table shows the main economic indicators in 1980–2017.[44]

Year 1980 1985 1990 1995 2000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
GDP in $
3.16 Bln. 4.41 Bln. 5.49 Bln. 9.34 Bln. 10.55 Bln. 13.18 Bln. 13.90 Bln. 15.85 Bln. 16.11 Bln. 17.34 Bln. 19.33 Bln. 19.95 Bln. 21.26 Bln. 22.43 Bln. 25.69 Bln. 28.04 Bln. 29.08 Bln. 30.33 Bln.
GDP per capita in $
1,067 1,323 1,462 2,067 2,056 2,280 2,348 2,348 2,617 2,600 2,891 2,830 2,861 2,954 3,313 3,540 3,597 3,675
GDP growth
−2.3% 3.6% −3.0% −3.4% −2.5% 3.9% 2.3% 11.1% −0.3% 6.8% 10.1% 1.1% 4.6% 3.8% 12.5% 9.0% 2.4% 2.5%
(in Percent)
12.1% 3.7% 7.0% 17.3% 15.6% 1.8% 2.4% 0.9% 10.8% 6.9% 5.1% 4.4% 4.5% 5.0% 5.2% 6.0% 6.7% 5.2%
Government debt
(Percentage of GDP)
... ... ... 36% 42% 32% 26% 23% 22% 22% 17% 16% 19% 25% 27% 29% 32% 33%


Household income or consumption by percentage share:
lowest 10%: 4.3%
highest 10%: 36% (2008)

Labour force: 2.078 million

Electricity – production: 2,200 GWh (2008)

Electricity – production by source:
fossil fuel: 67.78%
hydro: 32.22%
nuclear: 0%
other: 0% (2008)

Electricity – consumption: 2,000 GWh (2008)

Electricity exports: 10 kWh (2008)

Electricity – imports: 0 kWh (2008)

Agriculture – products: coffee, cocoa, coconuts, palm kernels, tea, rubber, sweet potatoes, fruit, vegetables; poultry, pork, vanilla

Currency: 1 kina (K) = 100 toea

Exchange rates: kina (K) per US$1 – 3.14 (April 2016), 2.7624 (November 1999), 2.520 (1999), 2.058 (1998), 1.434 (1997), 1.318 (1996), 1.276 (1995)

See also[edit]


  1. ^ "World Economic Outlook Database, April 2019". International Monetary Fund. Retrieved 29 September 2019.
  2. ^ "World Bank Country and Lending Groups". World Bank. Retrieved 29 September 2019.
  3. ^ "Population, total". World Bank. Retrieved 5 September 2019.
  4. ^ a b c d e "World Economic Outlook Database, October 2019". International Monetary Fund. Retrieved 21 October 2019.
  5. ^ "Global Economic Prospects, June 2020". World Bank. p. 74. Retrieved 10 June 2020.
  6. ^ a b c d e f g h i j k l m n "The World Factbook". Central Intelligence Agency. Retrieved 7 April 2019.
  7. ^ "Poverty headcount ratio at national poverty lines (% of population)". World Bank. Retrieved 7 April 2019.
  8. ^ "Poverty headcount ratio at $3.20 a day (2011 PPP) (% of population)". World Bank. Retrieved 5 September 2019.
  9. ^ "GINI index (World Bank estimate)". World Bank. Retrieved 7 April 2019.
  10. ^ "Human Development Index (HDI)". HDRO (Human Development Report Office) United Nations Development Programme. Retrieved 11 December 2019.
  11. ^ "Inequality-adjusted Human Development Index (IHDI)". HDRO (Human Development Report Office) United Nations Development Programme. Retrieved 11 December 2019.
  12. ^ "Labor force, total - Papua New Guinea". World Bank. Retrieved 10 January 2020.
  13. ^ "Employment to population ratio, 15+, total (%) (national estimate)". World Bank. Retrieved 5 September 2019.
  14. ^ "Ease of Doing Business in Papua New Guinea". Retrieved 24 January 2017.
  15. ^ a b "World Investment Report 2017 Country Fact Sheet: Papua New Guinea" (PDF). UNCTAD. 2014. Retrieved 21 September 2019.
  16. ^ "Sovereigns rating list". Standard & Poor's. Retrieved 26 May 2011.
  17. ^ a b Rogers, Simon; Sedghi, Ami (15 April 2011). "How Fitch, Moody's and S&P rate each country's credit rating". The Guardian. Retrieved 28 May 2011.
  18. ^ "Papua New Guinea Overview". The World Bank. 28 September 2016. Retrieved 25 January 2017.
  19. ^ "Papua New Guinea Country at a Glance". The World Bank. Retrieved 25 January 2017.
  20. ^ World Economic Outlook Database, October 2015, International Monetary Fund. Database updated on 6 October 2015. Accessed on 6 October 2015.
  21. ^ The Case for a Parliamentary Budget Office in Papua New Guinea. Social Science Research Network (SSRN). Accessed 18 July 2017.
  22. ^ a b Which country gives the most aid to Pacific Island nations? The answer might surprise you
  23. ^ "Simberi Gold Mine, Simberi Island, Papua New Guinea". Retrieved 17 September 2017.
  24. ^ "Hidden Valley". Harmony Gold Mining Company Limited. 2016. Retrieved 19 January 2017.
  25. ^ "Bougainville Copper Limited". Archived from the original on 23 September 2015. Retrieved 24 August 2015.
  26. ^[failed verification]
  27. ^ "Papua New Guinea Economy Papua New Guinean Economy, business opportunities in Papua New Guinea government Papua New Guinea business opportunities import and export opportunities". Retrieved 15 August 2020.
  28. ^ admin (31 October 2018). "Papua New Guinea Economic Report". Prime Advisory Network. Retrieved 15 August 2020.
  29. ^ Suwamaru, Joseph Kim (2015). Status Quo and Emerging Challenges in Information & Communication Technology for Papua New Guinea (PDF). Canberra, Australia: Australian National University. pp. 2pp. Retrieved 5 May 2020.
  30. ^ World Bank, International Telecommunication Union, World Telecommunication/ICT Development Report. "Mobile Cellular subscriptions". World Bank Open Data. World Bank. Retrieved 5 May 2020.
  31. ^ World Bank, International Telecommunication Union, World Telecommunication/ICT Development Report. "Fixed Broadband Subscriptions". World Bank Open Data. World Bank. Retrieved 5 May 2020.
  32. ^ World Bank. "Sustainable Energy for All ( SE4ALL ) database from the SE4ALL Global Tracking Framework". World Bank. Retrieved 5 May 2020.
  33. ^ "Global Economic Prospects, January 2020 : Slow Growth, Policy Challenges" (PDF). World Bank. p. 68. Retrieved 10 January 2020.
  34. ^ Asian Development Bank (2019). Pacific Energy Update 2019. Asian Development Bank. p. 19. Retrieved 5 May 2020.
  35. ^ a b CIA Factbook
  36. ^ IRENA (2013). Pacific Lighthouses: Renewable energy opportunities and challenges in the Pacific Islands region: Papua New Guinea (PDF) (1st ed.). Abu Dhabi, United Arab Emirates: IRENA. p. 4.
  37. ^
  38. ^ McLeod, Shane (10 April 2019). "Plugging in PNG: electricity, partners and politics". The Interpreter (Lowy Institute). Retrieved 5 May 2020.
  39. ^ PNG Power Ltd. "Edevu Hydro". PNG Power company site. PNG Power. Retrieved 5 May 2020.
  40. ^ Entura. "Naoro Brown hydroelectric project". Entura. Retrieved 5 May 2020.
  41. ^ "Maya Declaration: Commitment made by the Bank of Papua New Guinea". AFI Global - Bringing smart policies to life.
  42. ^
  43. ^ a b
  44. ^ "Report for Selected Countries and Subjects". Retrieved 3 September 2018.

External links[edit]